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1) What is a rider?
A rider is an attachment to an insurance policy that modifies the conditions of the policy expanding or
restricting its benefits or excluding certain conditions from the coverage
2) Oldest insurance in the phil
Fire and marine insurance
3) the ORIGINAL insured has no interest in a contract of reinsurance (sec 100)
4) 3 instances when breach of warranty does not avoid policy (p 235)
a. When loss occurs before time for performance
b. When performance becomes unlawful
c. When performance becomes impossible
(Sec. 75)
5) what are the 3 main classifications of insurance (p 43)
a. Life Insurance Contracts
- individual life
- group life
- industrial life
b. Non-Life Insurance Contract
- marine
- fire
- casualty
c. Contracts of Suretyship or Bonding
6) what is doing an insurance business include (sec 2)
The term doing an insurance business or transacting an insurance business, within the meaning of
this Code, shall include
a. Making or proposing to make, as insurer, any insurance contract;
b. Making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely
incidental to any other legitimate business or activity of the surety;
c. Doing any kind of business, including a reinsurance business, specifically recognized as constituting
the doing of an insurance business within the meaning of this Code;
d. Doing or proposing to do any business in substance equivalent to any of the foregoing in a manner
designed to evade the provisions of this code.
7) what may be insured (sec 3)
Any contingent or unknown event, whether past or future, which may damnify a person having an
insurable
interest,
or
create
a
liabity against
him,
maybe
insured
against.
INSURABLE INTEREST
The beneficiary must have an insurable interest in If the insured secured the policy, the beneficiary
the thing insured
need not have an insurable interest over the life of
the insured; if secured by the beneficiar, the latter
must have an insurable interest in the life of the
insured
10) When the facts material to the insurance policy (sec 31)
Materiality is to be determined not by the event, but solely by the probable and reasonable influence of
the facts upon the party to whom the communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making his inquiries.
11) (sec 63)
A condition, stipulation, or agreement, in any policy of insurance, limiting the time for commencing an
action thereunder to a period less than one (1) year from the time when the cause of action accrues, is
void.
If a period fixed is less than one year from the time the cause of action accrues, the stipulation would
be void. (Sec. 63) In the case however, of a policy of industrial life insurance, the period cannot be less
POSSIBLE QUESTIONS:
1. What are the functions of the Insurance Commissioner?
I. Adjudicatory/Quasi-judicial
a. Exclusive jurisdiction
Any dispute in the enforcement of any policy
b. Concurrent original jurisdiction (with the RTC)
Where the maximum amount involved in any single claim is P5,000,000.00 Five Million Pesos
except in case of maritime insurance which is within the jurisdiction of the MTC or the RTC depending
on the value involved
Where the amount exceeds P5,000,000.00 the RTC has jurisdiction
II. Administrative/Regulatory
a. Enforcement of insurance laws
b. Issuance, suspension or revocation of certificate of authority
c. Power to examine books and records, etc.
d. Rule-making authority; and
e. Punitive
2. Explain the concept of subrogation
3. Who are parties to an insurance contract
Insurer
Sec. 6. Every corporation, partnership or association duly authorized to transact insurance business may
be an insurer
Insured
Sec. 7. Anyone except a public enemy may be insured.
4. What is a public enemy?
A public enemy designates a nation with whom the Philippines is at war and it includes every citizen or
subject of such nation.
5. What is insurable interest in life insurance?
Sec. 10. Every person has an insurable interest in the life and health:
a. Of himself, his spouse, or his children;
b. Of any person whom he depends wholly or in part for his education or support, or in whom he has a
pecuniary interest;
c. Of any person under a legal obligation to him for the payment of money, or respecting property or
services, of which death or illness might delay or prevent the performance.
d. Of any person upon whose life any estate or interest vested in him depends.
6. When should insurable interest exist?
Sec. 19. An interest in property must exist when the insurance takes effect, and when the loss occurs,
but need not exist in the meantime; and interest in the life or health of a person insured must exist when
the insurance takes effect, but need not exist thereafter or when the loss occurs.
7. What is the general rule on change of interest and the exceptions
GEN RULE (Sec 20): A change of interest in any part of a thing insured unaccompanied by a
corresponding change of interest in the insurance, suspends the insurance to an equivalent extent, until
the interests in the thing and the interest in the insurance are vested in the same person.
EXCEPTIONS:
1. In life, health, and accident insurance (Sec. 20)
2. A change of interest in the thing insured after the occurrence of an injury which results in a loss (Sec.
21)
3. A change of interest in one or more several things, separately insured by one policy (Sec. 22)
4. A change of interest by will or succession on the death of the insured
5. A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly
insured, to the others (Sec. 24)
6. When a policy is so framed that it will enure to the benefit of whomsoever, during the continuance of
the risk, may become the owner of the interest insured (Sec. 57); and
7. When there is an express prohibition against alienation in the policy, in case of alienation, the
contract of insurance is not merely suspended but is avoided. (Art. 1306, Civil Code; Sec. 24)
8. Meaning of concealment; and matters that must be communicated
Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a
concealment.
Matters that must be communicated even in the absence of inquiry:
This section makes it the duty of each party to a contract of insurance to communicate in good faith all
facts within his knowledge only when:
a. they are material to the contract
b. the other has not the means of ascertaining the said facts; and
c. as to which the party with the duty to communicate makes no warranty
9. Compare concealment and misrepresentation
a. In concealment, the insured withholds information of material facts from the insurer, whereas in
misrepresentation, the insured makes erroneous statements of facts with the intent of inducing the
insurer to enter into the insurance contract
Warranty
Representation
NATURE
MATERIALITY
Presumed material
EFFECT OF FALSITY/NON-FULFILLMENT
Falsity or non-fulfillment operates as a breach of
contract
Representations are construed liberally in favor of the insured and are required to be only substantially
true. Warranties, by contrast must be literally true, or the contract will fail
11. Diff. Between Condition and Warranty
Condition
Warranty
EFFECTS
a) That the person taking the insurance lacked insurabe interest as required by law;
b) That the cause of death of the insured is an excepted risk;
c) That the premiums have not been paid;
d) That the conditions of the policy relating to military or naval service have been violated
e) That the fraud is of a particularly vicious type, as where the policy was taken out in furtherance of a
scheme to murder the insured, or where the insured substitutes another person for the medical
examination, or when the beneficiary feloniously kills the insured;
f) That the beneficiary failed to furnish proof of death or to comply with any condition imposed by the
policy after the loss has happened;
g) That the action was not brought within the time specified.
14. What is a policy and what are the contents of a policy of insurance?
Sec. 49. The written instrument in which a contract of insurance is set forth, is called a policy of
insurance.
Sec. 51. A policy of insurance must specify: (PPPP4IRA)
a. Parties;
b. Amount to be insured except in cases of open or running policies;
c. Premium
d. Property or life insured;
e) Interest of the insured in property insured, if he is not the absolute owner thereof;
f) Risks insured against; and
g) Period during which the insurance is to continue
Kinds of policies (Secs. 59, 60, 61, 62)
OPEN POLICY- is one in which the value of the thing insured is not agreed upon and the amount of
insurance merely represents the insurer's maximum liability. The value of such thing insured shall be
ascertained at the time of the loss.
VALUED POLICY- is one which expresses on its face an agreement that the thing insured shall be
valued at a specified sum.
RUNNING POLICY- is one which contemplates successive insurances, and which provides that the
object of the policy may be from time to time defined, especially as to the subjects of insurance, by
additional statements or indorsements.
15. GROUNDS FOR RESCISSION (BF-BAC)
a. Breach of material warranty;
b. False representation;
c. Breach of a condition subsequent;
d. Alteration of the thing insured;
e. Concealment
16. Sec. 71, Sec. 74, Sec. 75, Sec. 76, Effect of Breach of Warranty
Sec. 71. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as a
fact, is an express warranty thereof.
Sec. 74. The violation of a material warranty, or other material provision of a policy, on the part of
either party thereto, entitles the other to rescind.
Sec. 75. A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise
the breach of an immaterial provision does not avoid the policy (unless expressly stipulated).
Sec. 76. A breach of warranty without fraud merely exonerates an insurer from the time that it occurs,
or where it is broken in its inception; prevents the policy from attaching to the risk.
Effect of Breach of Warranty
1) Fraud is not essential for breach; falsity not fraud is the basis of liability on a warranty.
2) Effect without fraud:
- policy is avoided only from the time of breach
-and the insured is entitled to the return of premium paid at pro rata rate from the time of breach if it
occurs after the inception of the contract; or to all premiums if it is broken during the inception of the
contract. In the latter case, the contract is void ab initio and never becomes binding.
3) Effect with fraud
-policy is avoided ab initio, and the insurer is not entitled to the return of premium paid.
17. When an insurer is entitled to the payment of a premium, note exceptions (READ AND
STUDY ABOUT PREMIUMS; see examples and cases)
Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the
peril insured against.
GEN RULE: Notwithstanding any agreement to the contrary, no policy or contract of insurance issued
by an insurance company is valid and binding unless and until premium thereof has been paid
EXCEPTIONS: (page 258 of book)
a. In case of a life or an industrial life policy whenever the grace period provision applies (sec. 77)
b. Whenever under the broker and agency agreements with duly licensed intermediaries, a ninety-day
credit extension is given (sec. 77)
c. When there is acknowledgment in a policy or contract of insurance of receipt of premium even if
there is a stipulation therein that it shall not be binding until the premium is actually paid (Sec. 79)
d. No contract of suretyship or bonding shall be valid and binding unless and until the premium
therefore has been paid, EXCEPT where the obligee has accepted the bond, in which case the bond
becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor
to the surety.
e. When there is an agreement allowing the insured to pay the premium in installments and partial
payment has been made at the time of loss (case)
f. When there is an agreement to grant the insured credit extention for the payment of the premium, and
loss occurs before the expiration of the credit term;
g. When estoppel bars the insurer from invoking Section 77 to avoid recovery on a policy providing a
credit term for the payment of the premiums, as against the insured who relied in good faith on such
extension.
EXCUSES FOR NON-PAYMENT OF PREMIUMS
h. Fortuitous events
I. Condition, conduct, or default of insurer (see page 255)
18. What is double insurance? Sec. 95; requisites thereof (ReAD EFFECT OF DOUBLE
INSURANCE; note formula for ratable contribution of each insurer and examples)
Sec. 95. Double insurance exists where the same person is insured by several insurers separately in
respect to the same subject and interest.
REQUISITES:
There is no double insurance unless the following requisites exist:
a. The person insured is the same;
b. Two (2) or more insurers insuring separately;
c. There is identity of subject matter,
d. There is identity of interest insured; and
e. There is identity of risk or peril insured against.
19. Distinguish double insurance from overinsurance
Over-insurance
Double Insurance
AMOUNT OF INSURANCE
When the amount of the insurance is beyond the There may be no over-insurance as when the sum
value of the insured's interest
total of the amounts of the policies issued does not
exceed the insurable interest of the insured
NUMBER OF INSURERS
There may be one or more insurers involved
Double Insurance
Reinsurance
INTEREST
Involves the same interest
Insured is the party in interest in the two insurance Original insured has no interest in the reinsurance
contracts
contract
INSURED'S CONSENT
Insured has to give his consent
is to give information
Effect of Concealment
The concealment of any fact in relation to any of
the matters stated in Sec. 112 does not vitiate the
entire contract but merely exonerates the insurer
from a risk resulting from the fact concealed
(1) There must be an actual relinquishment by the person insured of his interest in the thing insured;
(2) There must be a constructive total loss;
(3) The abandonment be neither partial nor conditional;
(4) It must be made within a reasonable time after receipt of reliable information of the loss
(5) It must be factual
(6) It must be made by giving notice thereof to the insurer which may be done orally or in writing; and
(7) The notice of abandonment must be explicit and must specify the particular cause of the
abandonment
29) Differentiate friendly fire from hostile fire
Hostile Fire
Friendly Fire
DEFINITION
LIABILITY OF INSURER
Insurer is liable
30) When alteration in the thing insured entitled the insurer to rescind
REQUISITES:
a. The use or condition of the thing is specifically limited or stipulated in the policy;
b. Such use or condition as limited by the policy is altered;
c. The alteration is made without the consent of the insurer;
d. Alteration is made by means within the control of the insured; and
e. The alteration increases the risk
GEN. RULE: Not all alterations rescind the policy
EXCEPTION:
a. When alteration increases the risk;
b. There is a violation of the provisions of the policy
31) What is contract of life annuity and distinguish it from life insurance
Contract of life annuity: the debtor binds himself to pay an annual pension or income during the life of
one or more determinate persons in consideration of a capital consisting of money or other property,
whose ownership is transferred to him at once with the burden of the income.
a. An annuity contract, unlike the life insurance contract, insures against economic problems resulting
from a long life, rather than an early death.
b. From the insurer's viewpoint, insurance looks to longevity, while annuity, to transiency
c. Under the ordinary life insurance policy, the insured pays to the insurer an annuity and his
beneficiary receives at the insured's death the lump sum payment. Under the usual form of annuity, the
lump sum is paid to the insurer immediately and the annuitant receives the annuity payments as long as
he lives.
d. An annuity appears more like an investment instead of an insurance, which may or may not turn out
to be profitable, while life insurance has a characteristic akin to indemnity, i.e., the insurer will
reimburse the insured's beneficiaries a large sum upon the insured's death.
32) What is compulsory motor vehicle liability insurance
Insurance covering loss or liability arising from accident or mishap, excluding those falling under other
types of insurance such as fire or marine.
NO FAULT CLAUSE: Clause that gives the victim (injured person ot heirs of the deceased) an option
to file a claim for death or injury without the necessity of proving fault or negligence of any kind.
STUDY LOSS particularly on FRIENDLY AND HOSTILE FIRE, PROXIMATE CAUSE, read
EXAMPLES. SEE ALSO REVIEWER page 68.